Government Shutdown Nears With House Vote on Obamacare

U.S. House Speaker John Boehner, a Republican from Ohio, walks to the House Chamber for a procedural vote on Capitol Hill in Washington, D.C. on September 28, 2013. Photographer: Alex Wong/Getty Images

Sept. 29 (Bloomberg) -- The U.S. government hurtled toward
a partial shutdown for the first time in 17 years on Oct. 1 as
Congress deadlocked over Republicans’ insistence on delaying the
2010 health-care law.

Senator Richard Durbin of Illinois, the chamber’s second-ranking Democrat, predicted the government would close in two
days after the House voted 231-192 early today to stop many of
the Affordable Care Act’s central provisions for one year and
tie that to an extension of government funding through Dec. 15.

“Tomorrow, the Senate will come into session, the House
position, which is basically the same one they sent us the last
time, is going to be rejected again,” Durbin said on CBS’s
“Face the Nation.” Asked if he thought a government shutdown
would occur, he said, “I’m afraid I do.”

President Barack Obama has said he would veto the House
proposal. The past day’s developments raised the prospect of the
first government shutdown since 1996, putting as many as 800,000
federal employees out of work starting Tuesday, Oct. 1.

Services such as mail delivery, air traffic control and
Social Security payments would continue, even as national parks
and Internal Revenue Service call centers would probably close.
Even three-fourths of Obama’s staff would be sent home.

Stocks Slump

Concerns that the budget impasse will hurt economic growth
helped push the Standard & Poor’s 500 Index to its first weekly
decline since August. The index fell 0.4 percent to 1,691.75 on
Sept. 27, and dropped 1.1 percent last week. The rate on 10-year
Treasury notes fell three basis points to 2.62 percent.

Texas Republican Senators John Cornyn and Ted Cruz said
Senate Majority Leader Harry Reid should call the Senate into
session today to consider the latest House proposal.

“There’s no reason the Senate should be home on
vacation,” Cruz, who last week spoke on the Senate floor for
more than 21 hours to protest the health care law, said today on
NBC’s “Meet the Press.” He said he hopes Reid, a Nevada Democrat,
“backs away from that ledge.”

The final chance to avert a shutdown could come tomorrow
evening, if the Senate turns down the latest House plan, as
Democrats promise to do.

Boehner’s Choices

At that point, House Speaker John Boehner would have four
main choices -- two of which avert a shutdown. He could pass the
Senate bill with mostly Democratic votes or attempt a short-term
funding extension to keep the government open past Oct. 1, when
fiscal year 2014 begins.

The other two options lead to a shutdown. Boehner could add
health-law provisions to the spending bill and ask the Senate to
go along, which Senate Democratic leaders have said they would
reject, or do nothing and wait to see the political fallout.

The latest House bill would leave intact some parts of the
health-care law already in effect, such as requirements
insurance companies cover people with pre-existing conditions
and that family plans cover children up to age 26. The latest
bill would allow insurers to deny abortion coverage based on
religious or moral objections.

Proposed Delay

The House measure would delay a requirement for people to
purchase coverage or face a penalty, and postpone the creation
of marketplaces -- which are supposed to start functioning Oct.
1 -- where people could shop for coverage from private insurers.
Further, it would repeal the 2.3 percent medical device tax,
which would increase the U.S. deficit by about $29 billion
during the next decade.

The exchanges will be open in the event of a shutdown
because the 2010 law relies primarily on mandatory spending,
which congressional inaction can’t stop. It’s the budget
category used for benefits such as Medicare and Social Security.

Representative Kevin McCarthy, the top House Republican
vote counter, said that if the Senate rejects the latest House
action, Republican leaders would send back the stopgap measure
with “another provision” attached.

The provision would “reflect the House” and would be one
“I believe the Senate can accept,” McCarthy of California said
on “Fox News Sunday.” He did not specify the options.

The House Republican leadership doesn’t expect to pass a
clean spending bill or have enough Republicans who would want to
do that, according to a leadership aide who spoke on condition
of anonymity to discuss party strategy.

Government Contribution

The House probably will amend the spending bill one more
time. A likely option would eliminate the government’s
contribution to the health insurance of members of Congress and
their staff, as a way of testing Democrats’ willingness to make
any change to the health law, the aide said.

Republicans and Democrats began bracing for a shutdown by
attempting to affix blame on the other side. It is at least the
fourth time in the past three years that lawmakers have taken a
budget battle to the brink of a fiscal crisis, each time
averting the worst-case scenario just before or after the
deadline.

“This has been the Congress of chronic chaos since day
one, and this is just another episode,” said Representative
Steve Israel, a New York Democrat.

Boehner had attempted to avoid this fight, offering a plan
earlier in September that wouldn’t have tied the health law,
which has become known as Obamacare, to the extension of
government funding. Instead he wanted to have what he called a
“whale of a fight” in October over raising the federal debt
ceiling. That will be necessary by Oct. 31 at the latest to
ensure the government has enough money to pay its bills,
according to the Congressional Budget Office.

Boehner Rebuffed

Tea Party-backed hardliners aligned with Cruz rejected
Boehner’s plan, insisting on the decisive battle that is
unfolding in the days leading up to Oct. 1, when insurance
exchanges open and allow uninsured Americans to enroll for
coverage in 2014.

“The American people deserve to have time to see what this
monstrosity will do before it is implemented,” said
Representative John Culberson, a Texas Republican. “We are
simply offering a compromise of a year’s delay.”

The vote on the one-year delay was mostly along party
lines, with Democrats Mike McIntyre of North Carolina and Jim
Matheson of Utah voting yes and Republicans Chris Gibson and
Richard Hanna, both of New York, voting no.

‘Bad Policy’

Representative Michael Grimm, a New York Republican, said
he expected Boehner to eventually seek Democratic votes.

“Do I think Obamacare’s bad policy?” he said. “Yes, but
I also think shutting down the government is bad policy. It’s
almost like two wrongs don’t make a right. We have to get past
this and govern.”

Boehner and House Majority Leader Eric Cantor of Virginia,
who often rally the party on the House floor before major votes,
didn’t give speeches.

In addition to the Obamacare delay, the House voted 248-174
to attach the repeal of an excise tax on medical devices to the
spending bill.

The continued fight over the spending bill makes the
outcome of the debt-ceiling debate even less certain. Lawmakers
could still be negotiating the end of this debate even as the
next one looms.

In a government shutdown, essential operations and programs
financed with permanent streams of money would continue. Still,
a shutdown could reduce fourth-quarter economic growth by as
much as 1.4 percentage points, depending on its duration,
according to economists. The biggest effect would come from the
output lost from furloughed workers.

The House passed a bill 423-0 early today that would make
sure that U.S. troops and the civilians and contractors who
support them get paid during any shutdown.

Funding Levels

Representative Jim McGovern, a Massachusetts Democrat, said
Republicans wouldn’t accept the victory they were getting --
keeping current funding levels under across-the-board
sequestration that Democrats find unacceptable and damaging.

“I was kind of hoping the grownups in the Republican
conference would prevail,” McGovern said.

House Republicans have voted more than 40 times to delay,
defund or repeal all or part of the 2010 health-care law, which
is designed to expand coverage to at least 30 million people.
Some of the narrower proposals became law. The U.S. Supreme
Court upheld the law in June 2012.

Individual Mandate

The new House plan would postpone for one year a central
provision of Obamacare: the requirement that almost all
individuals obtain insurance.

Tax subsidies scheduled to begin Jan. 1, 2014, would start
a year later. The plan would suspend some Obamacare taxes for
the 2014 tax year and allow employers with religious objections
to opt out of the mandate that most workplace insurance plans
include contraceptive coverage.

“It’s not ready,” said Representative Marsha Blackburn, a
Tennessee Republican. “We are seeing the impact of delay after
delay that is being done by this administration, and what we are
saying is it is time, as a fairness issue to the American people
-- delay the whole thing.”

That’s different from the Republicans’ initial spending
bill, which passed Sept. 20 and would have choked off government
funding for Obamacare. The Senate rejected that measure and
passed its bill on a 54-44 party-line vote Sept. 27.

Republicans said they hoped their proposal would attract
some support among Senate Democrats and bring Democrats into
negotiations that they have resisted.

‘Pointless’

“We continue to be willing to debate these issues in a
calm and rational atmosphere,” Reid said in a statement that
called the Republican plan “pointless.” He added, “The
American people will not be extorted by Tea Party anarchists.”

Democrats said any changes to the health law shouldn’t be
made to avert a catastrophe.

“The president has shown that he is willing to improve the
health-care law and meet Republicans more than halfway to deal
with our fiscal challenges, but he will not do so under threats
of a government shutdown that will hurt our economy,” Jay
Carney, the White House press secretary, said in a statement
yesterday. “Any member of the Republican Party who votes for
this bill is voting for a shutdown.”